What are Scope 1, 2, and 3 Carbon Emissions?

Understanding the different types of carbon emissions is crucial for businesses and organizations aiming to reduce their environmental impact.

Carbon emissions are categorized into three scopes by the Greenhouse Gas Protocol, the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions.

Published: February 27, 2024.

Scope 1: Direct Emissions

Scope 1 emissions are direct emissions from sources that are owned or controlled by the company. These emissions occur from sources that are directly linked to the company's operations. Examples of Scope 1 emissions include:

• Emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc. For instance, when a company operates a fleet of delivery trucks that burn diesel fuel, the emissions from those trucks are considered Scope 1.
• Emissions from chemical production in owned or controlled process equipment. For example, if a company manufactures chemicals and the process releases carbon dioxide directly into the atmosphere, those emissions are Scope 1.
• Direct venting of gases, such as methane emissions from oil and gas extraction processes.

Reducing Scope 1 emissions often involves making operational changes, such as upgrading to more efficient machinery, switching to cleaner fuels, or implementing energy-saving measures.

Scope 2: Indirect Emissions from Purchased Electricity

Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the company.

Unlike Scope 1, these emissions occur at the place where the electricity or heat is generated, not at the company's own facilities. Examples of Scope 2 emissions include:

• Electricity consumption: When a company buys electricity to power its offices, the emissions produced during the generation of that electricity at the power plant are considered Scope 2.
• Heating and cooling: Similarly, if a company purchases steam or hot water for heating its buildings from a utility provider, the emissions from producing that steam or hot water are Scope 2.

Scope 2 emissions can be reduced by increasing energy efficiency, purchasing renewable energy, or investing in renewable energy certificates (RECs) or carbon offsets.

Scope 3: Other Indirect Emissions

Scope 3 emissions are the most complex category, encompassing all other indirect emissions that occur in a company's value chain. These emissions are not produced by the company itself but are a result of the company's activities, from sources that they do not own or control.

Scope 3 emissions often represent the largest share of a company's carbon footprint and include:

• Upstream activities: These include the extraction and production of purchased materials and fuels, transportation of purchased fuels, and employee business travel.
• Downstream activities: Including the use of sold products and services, end-of-life treatment of sold products, and investments.

Addressing Scope 3 emissions can be challenging due to the need for comprehensive data collection and cooperation across the supply chain.

Strategies to reduce Scope 3 emissions include engaging with suppliers to encourage carbon reductions, redesigning products to be more efficient, and encouraging consumers to use products more sustainably.

Why is it Important to Measure All Three Emission Scopes?

Measuring all three scopes of carbon emissions - Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (all other indirect emissions in a company's value chain) - is crucial for several reasons, each contributing to a comprehensive strategy for tackling climate change and enhancing sustainability practices within organizations. Here are the key reasons why it's important to measure all three emission scopes:

Comprehensive Understanding of Environmental Impact

Measuring emissions across all three scopes provides a complete picture of an organization's environmental footprint. Scope 1 and 2 emissions offer insight into the direct and energy-related emissions for which a company is responsible.

However, for many organizations, the majority of their carbon footprint lies in Scope 3 emissions, which include both upstream and downstream activities. Without measuring these, companies might overlook significant sources of emissions that they indirectly influence.

Informed Decision-Making

A thorough understanding of where and how emissions are generated enables organizations to make informed decisions about where to focus their reduction efforts.

By identifying the largest sources of emissions within their operations and value chain, companies can prioritize initiatives that will have the most significant impact on reducing their overall carbon footprint. This strategic approach to emissions reduction ensures that resources are allocated efficiently and effectively.

Stakeholder Transparency and Reporting

Consumers, investors, and regulatory bodies are increasingly demanding transparency regarding environmental sustainability. Measuring and reporting on all three scopes of emissions demonstrate a company's commitment to comprehensive environmental stewardship and can enhance its reputation.

It also aligns with global reporting standards and frameworks, such as the Greenhouse Gas Protocol, which guides companies in reporting their emissions comprehensively.

Regulatory Compliance and Risk Management

In many regions, legislation regarding carbon emissions and climate change is becoming more stringent. By accurately measuring all emission scopes, companies can ensure compliance with current regulations and prepare for future legislative changes.

Furthermore, understanding the full scope of emissions can help identify areas of potential risk, such as dependence on high-emission energy sources or supply chain vulnerabilities, allowing companies to mitigate these risks proactively.

Competitive Advantage

Organizations that measure and actively work to reduce their emissions across all scopes can achieve a competitive advantage. Demonstrating environmental responsibility can strengthen brand value, attract eco-conscious consumers, and satisfy investor demands for sustainable business practices.

Additionally, companies that lead in sustainability are often more attractive to top talent and can benefit from increased employee engagement.

Driving Industry-wide Change

When companies measure and take responsibility for reducing emissions across their entire value chain, they can drive broader industry-wide changes.

By engaging with suppliers and customers on sustainability initiatives, companies can influence practices beyond their immediate operations, contributing to significant reductions in global greenhouse gas emissions.

Measuring all three scopes of carbon emissions is essential for a holistic approach to environmental management and sustainability. It enables organizations to fully understand and take responsibility for their impact on the planet, make informed decisions to reduce emissions, comply with regulations, enhance their reputation, and contribute to global efforts to combat climate change.

Few Final Words

Understanding and categorizing carbon emissions into Scope 1, 2, and 3 is essential for companies aiming to reduce their environmental impact. It enables businesses to identify where emissions are occurring within their operations and value chain, allowing for the development of targeted strategies to reduce emissions at each level.

While Scope 1 and 2 emissions are generally more straightforward to identify and manage, Scope 3 emissions require a more extensive understanding of the supply chain and collaboration with partners to reduce emissions effectively.